PwC Reports Improved Business Confidence in South Africa Post-GNU Formation

According to a recent report by PricewaterhouseCoopers (PwC), business confidence in South Africa has “notably” improved since the establishment of the Government of National Unity (GNU) in June 2024. This coalition government, formed in response to the recent general elections, consists of ten political parties and is seen as a turning point for the nation’s economic landscape.

Economic Optimism and Market Performance

The PwC South Africa Economic Outlook report for 2024 highlights several positive developments in the South African economy:

• Stock Market Gains: The Johannesburg Stock Exchange (JSE) All Share Index rose by an impressive 15.2% in the third quarter, reaching record highs as investor optimism grows about the potential impacts of a more effective government on economic growth and company revenues.
• Currency Strength: The South African rand has appreciated significantly, trading at nearly 17 units per U.S. dollar by late September, marking levels not seen since early 2023.

Positive Sentiment in Financial Markets

Lullu Krugel, PwC South Africa’s chief economist, noted that global financial markets have shown increased favor towards South Africa since the formation of the GNU. This shift has positively influenced asset appraisals and enhanced expectations for businesses predominantly linked to the South African economy.

The report also indicated that government bond yields have reached their lowest levels in three years, and domestic business activity and sentiment are at their highest in several years, signaling a robust outlook for the near future.

Growth Projections and Economic Partnerships

PwC anticipates real GDP growth of 0.8% for South Africa in 2024, with a further increase to 1.4% in 2025. This improved economic outlook could help mitigate anticipated revenue shortfalls, as a stronger economy is expected to generate higher tax revenues during the 2024/2025 fiscal year.

Moreover, the recent launch of a second phase of government-business partnership initiatives aims to tackle critical economic challenges, including electricity load-shedding and logistical bottlenecks. South African CEOs have expressed their commitment to supporting the GNU in implementing necessary reforms to accelerate economic growth and employment opportunities.

The findings from PwC’s latest report underline a renewed sense of optimism in South Africa’s business environment. With the formation of the GNU, a commitment to reforms, and a cooperative spirit between government and business leaders, the future looks promising for South Africa as it navigates its economic challenges and opportunities.